1. Field of the Invention
The present invention is directed generally to a method of investing funds in an investment account, and more particularly to a method of investing funds in an investment account that varies asset allocations between multiple asset classes over time.
2. Description of the Related Art
An investment account is an account that is typically held by an account holder or investor for long-term investment or capital purposes. The investment account may reside at a financial institution, on a record keeping platform (e.g., a record keeping platform that overlays another database account platform), on a database account platform, or the like. The investor or a professional account manager may control how the funds in the account are invested. Typically, the funds in an investment account are invested in multiple asset classes. The portion of the funds invested in each asset class may change over time based on various factors, such as the investor's age, investment goals, etc. For example, target date funds (defined below) vary the percentage of the funds invested in equities over time. Thus, target date funds may be characterized as modifying asset allocations based on the investor's increasing age. However, all investors invested in a particular target date fund have the same asset allocation for the same point on the glide path of the particular target date fund regardless of other factors or considerations relevant to the investors. Therefore, a target date fund may not provide an optimum investment strategy for each investor in the target date fund.
A managed account (defined below) provides more flexibility because a manager may change the asset allocation within the account at any time based on any factor the investor or manager deems relevant. However, managed accounts are expensive and beyond the financial means of many investors.
Therefore, a need exists for a method of determining asset allocations for an investment account that considers factors relevant to the investor holding the investment account. A method that avoids an individualized approach of the type used by managed accounts would be particularly beneficial. A desirable method would not require investor input to determine changes in asset allocation and instead would use only information available from a record keeper (defined below). The present application provides these and other advantages as will be apparent from the following detailed description and accompanying figures.